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Groups Ask USDA and DOJ to Stop the Retail Squeeze on Farmers and Consumers
WASHINGTON - December 7 - Today consumer and farmer groups encouraged the U.S. Department of Agriculture (USDA) and Department of Justice (DOJ) to follow up its final competition workshop tomorrow with concrete actions to address the anti-competitive practices that benefit a few large players in the food system.
At a press conference at the National Press Club, national consumer group Food & Water Watch joined farmers and ranchers to discuss how consolidation in the retail sector has affected the marketplace. Consolidation has given the largest retailers considerable purchasing power that allows them to exert influence over food manufacturers, meat processors, produce shippers and other suppliers to reduce their prices and require specific packaging and manufacturing practices. Suppliers also pressure farmers to lower their prices and workers to lower their wages—and when a few control the entire market, consumers can lose as well.
“The American food chain is shaped like an hour-glass where a handful of large powerful companies stand between more than 300 million consumers and two million farmers. Thanks to mergers and consolidation, vibrant competition in the retail grocery industry is all but dead,” said Wenonah Hauter, Executive Director of Food & Water Watch. “There is an illusion of choice between many different but similar processed foods, but almost all of them are sold by the same few companies.”
Real expenditures on food have risen 12 percent over the past decade. Food inflation was especially high during 2007 and 2008. These growing prices are especially difficult for lower-income consumers. According to a 2008 report by the Congressional Research Service, even a 4 or 5 percent increase in the price of food has a significant impact on the purchasing power of lower income families.
A majority of studies reviewed by the USDA found that increased grocery chain consolidation contributed to an increase in consumer grocery prices that may force families to choose processed food, which can be sold more cheaply, over more healthful options. Today, with 40 percent of households earning less than $39,000, a small increase in the price of food can dramatically erode family food security. The USDA recently reported that one out of 7 households is suffering from hunger and one out of 4 children do not have enough to eat.
“Children are the ones left out on the margins,” said Hauter. “As food has become more consolidated, processed foods have become more prevalent and kids have become more obese. It’s no coincidence that 75 percent of snack chips and 80 percent of kid’s cereals are sold by the top four firms, and the four biggest cookie manufacturers sell two-thirds of all cookies.”
Hauter was joined at the press conference by Alabama contract poultry grower Garry Staples; Minnesota hog producer Paul Sobocinski, also of the Land Stewardship Project; Wisconsin dairy farmer Joel Greeno, National Family Farm Coalition; and Peter Mickelsen, Montana ranch owner and former cow-calf operator, Northern Plains Resource Council.
As the USDA and DOJ wrap up a year of traveling across the country to hear the concerns of agriculture producers about the lack of fair competition, these groups call for actions to restore fairness in the marketplace, including:
- Merger Review: DOJ should review the large agricultural mergers over the past decade to determine the impact these corporate combinations have had on the marketplace.
- The Federal Trade Commission must join the interagency task force on agricultural concentration and take action to curb the effects of concentrated market power in the retail and processed food sectors.
- Finalize the recent livestock rule: The USDA should finalize and implement strong livestock marketing and contracting rules, such as the proposed GIPSA rule that was required by the 2008 Farm Bill.